Subscription Feeds

Entries by Date

Entries by Keyword

Used car sales could reach 8 million

Friday, October 14 2016 :: Keywords: uk used car market, used car market :: Permalink

Last month’s press release from the SMMT said that a record number of used cars changed hands in the first half of 2016 – over four million and 7.9% up on 2015. This includes private sales, but franchised and independent dealers will have experienced sales growth too.

If demand continues at this level, we could see nearly eight million used car sales this year – perhaps more - compared to an estimated 7.6 million in 2015. None of this is surprising given the boom in new car sales since 2012, which has increased the supply of part-exchanges and nearly new cars.

The same factors driving the new car market also drive the used car market, particularly consumer confidence. Therefore, as the chart illustrates, used car sales tend to move in unison with new car sales. The chart also records how new car demand weakened quickly during and after the 2008/2009 recession, whereas used car demand was relatively strong. New car sales fell by nearly 20% between 2007 and 2011, but used car sales declined by less than 10%.

With new car sales accelerating from 2012, the used car market has benefited from newer stock. BCA Pulse reported the average age as 56.6 months in March 2008, just before the recession. In March 2016, the age of cars at auction was 60.6 months, which is down on the 63.1 months recorded in March 2015. So, the robust new car sales of recent years are now pulling through to the used car market.

This pull-through effect is also evident in used car prices at auction. BCA Pulse reported an average price of £5,400 in March 2008, which had risen to £7,838 this year – up 45% compared to RPI inflation of 23%. Of course, model mix and specification will account for some of the difference, but age will be an important factor. As for retail prices, our research implies an increase of 6% in the past year with the average price of a dealer-supplied used car nearly £12,000.

One question requiring further research is how the three sectors have fared - private, franchised dealers and independent dealers. Independent dealers’ financial reports suggest that this sector has benefited substantially. In their 2015 return to Companies House, Car Shops reports a sales increase of 12.5% between 2014 and 2015. Available Car in its accounts notes an increase of 9.25%, 2014/2015.

But with used to new ratios hovering around 1:1, according to ASE, we wonder whether franchised dealers have been able to cash in on the used car sales boom to the same extent as the independents.

Written by Trend Tracker director Chris Oakham, this piece first appeared in the subscription monthly Auto Retail Bulletin.

(See for subscription details.)

1 Comment

Trend Tracker Limited Registered in England (4716049)

We would like to place cookies on your computer to help make this website better. Read our cookie policy. Click here to opt-out from receiving cookies.